Wal-Mart Promises To Buy More U.S.-Made Goods

For a long time now, it has seemed like just about everything sold in American stores was made overseas - much of it in China. But rising wages there are making Chinese factories less competitive, and that could be a big opportunity for American manufacturers.

Yesterday, in Orlando, Wal-Mart was the unlikely sponsor of a conference aimed at encouraging U.S. companies to bring their production back home.

NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Jeffrey Immelt, the CEO of General Electric, knows a thing or two about manufacturing, and he suggest that the U.S. manufacturing sector is poised for a comeback.

JEFFREY IMMELT: I'm going to tell you guys, say, on the street level, gut level, it's true. We can compete. It is strong. It's getting better, not worse. And, you know, we can compete from here.

ZARROLI: Immelt spoke yesterday at a concert sponsored by Wal-Mart, which has recently positioned itself as a champion of domestic manufacturers. It's promised to buy an additional $50 billion of U.S.-made goods over the next decade.

That might seem a bit ironic. Like other U.S. retailers, Wal-Mart sells a lot of products made in China. But there are big changes taking place in manufacturing and they have a lot to do with wages.

HAL SIRKIN: In today's world, economic shifts quickly. And those of you who manufacture in China know that wages in China have been rising at 15 to 20 percent per year.

ZARROLI: That's Hal Sirkin of the Boston Consulting Group. He says the Chinese wage advantage isn't as big as it was and it's being offset by other factors, like higher American productivity and falling energy costs.

SIRKIN: Now is the best time to start up a plant in one of the world's lowest cost, developed countries - the United States of America.

ZARROLI: So far at least, this hasn't made much of a dent in the U.S. trade gap with China, but some companies do appear to be rethinking that decision to manufacture overseas.

Kim Kelley is CEO of Hampton Products International. A few years ago, the company began moving its production from Asia to the Midwest. Kelley says being closer to its customers has given the company more flexibility.

KIM KELLEY: We believe that the only truly sustainable competitive advantage is speed to market. And if we're manufacturing and innovating here in the United States, we believe that our speed to market will be enhanced significantly.

ZARROLI: But there have been challenges. It's been hard to find workers trained in the kind of metal fabrication the company needs.

KELLEY: Our sense of urgency is that a lot of the people who are very good at many of the skill sets required to execute in that world are retiring or dying.

ZARROLI: Kelley says once he expressed interest in moving production back home he got a lot of support from the state of Wisconsin. In fact, many states are desperate to lower manufacturers inside their borders. Representatives of 31 states attended the conference in Orlando, including eight governors.

Luis Natera is CEO of a lighting company. He was planning to meet with Florida officials today. He's not happy with the quality of work he's been getting in China and he's thinking about relocating.

LUIS MATERA: See, because you get more control over your product everything that's made in China is difficult to believe in the quality.

ZARROLI: None of this suggests that the U.S. manufacturing sector will be the source of jobs it once was. U.S. factories have become so productive they can do more with fewer workers.

But as the wage gap between and China and the U.S. declines, U.S. companies have less incentive to do their manufacturing overseas.